Net Ad Spend in Asia Pacific To Expand By 6.2% In 2018, After 6.1% Growth In 2017

29 March 2018

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Advertising growth for the region will remain steady into 2019, but decelerate from 2020

Traditional TV advertising, now in decline in Asia Pacific, will continue to grow in some key geographies

Internet advertising moving center-stage as the primary growth driver in some of APAC’s largest ad markets

(HONG KONG/MUMBAI/SINGAPORE MARCH 29 2018) Advertising revenue across Asia Pacific expanded by 6.1% in 2017 to reach ~US$173 billion, and is on course to grow by a further 6.2% in 2018 to move close to US$184 billion this year, according to a new report from Media Partners Asia (MPA).

Asia Pacific Advertising Trends 2018, published today, forecasts net ad spend after commissions and discounts across 14 major markets in the region. The region’s advertising outlook remains positive with MPA analysts forecasting ad gains in almost all markets in 2018, and ad growth across the board over 2017-22. MPA expects net ad spend in APAC to total US$226 billion by 2022, having grown by a 5.5% CAGR from 2017.

“Market momentum for Asia Pacific as a whole should hold steady over 2018 and 2019, but we expect a slight deceleration from 2020 as online advertising, increasingly the main engine of growth across the region, settles into a gentler trajectory in some large ad markets,” remarked Vivek Couto, executive director, Media Partners Asia. “Much of digital’s growth will be driven by China, which should retain more than 60% of online advertising in Asia Pacific over our forecast period.”

Couto added: “Traditional TV advertising is now in or on the verge of decline in most countries, having peaked at US$54 billion across the region in 2017. That said, India, Indonesia, the Philippines and Thailand are notable exceptions, underscoring the ongoing importance of mass-market broadcast as a platform for reach and awareness in these growth economies. Overall, TV advertising should contract very slightly from 2017 to 2022, at a -0.1% CAGR. Print advertising, however, is on the retreat almost everywhere, although both newspaper and magazine advertising will continue to grow at a modest single-digit pace in India. Out-of-home, meanwhile, remains on an upward trajectory in most markets, benefiting from ongoing urbanization as well as digital upgrades.”

Growth Dynamos In China And India

China’s ad market, by far the largest in Asia Pacific, also experienced the highest growth in 2017 with a 9.9% increase taking net spend past US$86 billion, powered by increasingly mobile-centric digital platforms as well as a buoyant economy. MPA projects net advertising in China to expand by a healthy 6.9% CAGR from 2017 to surpass US$120 billion by 2022, supported by solid consumer fundamentals and macroeconomic growth. Online platforms dominate with a 56% share of China’s ad market in 2017. This slice should grow to 68% by 2022, an 11.3% CAGR, according to MPA.

Ad growth in India – a contender for Asia’s most dynamic market – was weighed down in 2017 by the lingering effects of demonetization as well as a new goods and services tax, which disrupted advertiser supply chains, inhibiting marketing activity in the process. Net ad spend consequently grew by 6.9% in 2017 to total US$9.0 bil., ending three successive years of double-digit growth. Nonetheless, India should re-emerge as APAC’s fastest growing ad market over the next five years. MPA analysts forecast a 10.9% CAGR in net ad spend in India from 2017 to total US$15 billion by 2022.

This pace just eclipses the Philippines, Asia’s second-fastest growing major ad market over the next five years with a 10.8% CAGR according to MPA. Thailand’s ad market, showing signs of emerging from a prolonged malaise, is on course to grow by an 8.0% CAGR from 2017-22, making it the region’s third fastest growing ad market over the next five years, with China ranked fourth.

While the overall rate of advertising growth for APAC is slowing, a mixed picture emerges on the ground. Ad spending over 2017-22 should pick up speed compared with 2012-17 in Australia, Hong Kong, Malaysia, the Philippines, Singapore and Thailand. At the same time, cornerstone markets such as India, Indonesia and Japan should be able to sustain the pace they have set over the past five years. Other territories, however, are entering a slower growth cycle. Five markets will see less than a 2.0% CAGR from 2017-22: New Zealand (1.9%), Malaysia (1.8%), Taiwan (1.7%), Korea (1.4%) and Singapore (1.0%).

Internet Trends Become Market Trends

The pattern of ad growth across Asia Pacific is becoming increasingly determined by online media, which will soak up the vast majority of new ad dollars in the region for the foreseeable future. MPA estimates that internet advertising in APAC grew by 18.1% in 2017 to nudge past US$76 billion, with a projected 14.4% growth in 2018 taking the total to US$87 billion this year. The overall CAGR for internet ad spend between 2017 and 2022 should slow to 11.1% (10.8% ex-China), although the pace of growth from a low base in India, the Philippines and Vietnam should still top 20%. Online ad spend already accounted for more than half the market in Australia (51%) and China (56%) in 2017. Taiwan is forecast to cross the half-way mark in 2019, while New Zealand should follow suit somewhere around 2020.

Online video advertising meanwhile is entering into a red-hot growth phase, powered by the rising prominence of high-speed broadband. MPA forecasts that by 2022, online video platforms will contribute at least 10% of all advertising in nine markets: Australia, China, Hong Kong, Indonesia, Malaysia, New Zealand, Singapore, Taiwan and Vietnam, compared with just one market (Taiwan) in 2017. At the same time, online video spend will be near TV’s share in Australia and China, two big internet markets, over the same time-frame, with Hong Kong and New Zealand not far behind.